Businesses are required to pay taxes when they have applied for VA tax ID and they are also impacted by the new federal tax code. Looking at the new code, Virginia might be the receiver of unintentional consequence because of the state tax hike. At the end of the day, the state will receive hundreds of millions of dollars as revenue resulting from the amended federal tax code.
This might confuse many because the federal tax cuts should lower the state revenue when approaching at a logical standpoint but this is not the case with Virginia. When one is to inspect closely the tax law that governs Virginia then they might be able to understand. The deal is that the people will be able to apply for standard deduction when it comes to their federal tax returns but the payoff is that they also have to apply the same standard deduction when dealing with their state tax returns.
Tax Foundation’s Nicole Kaeding said that the end result for this setup is that Virginia might be able to feel the considerable significance of the federal tax code when their budget has already been finalized.
She added that the number of individuals that will apply for standard deduction will be much higher compared to the last few years then the number of deductions taken from the state is expected to be lesser. The result of this is that the revenue generated by Virginia is considerably much higher.
When talking to the officials of the state, they said that the figure could reach as much as $300 million.
Commonwealth Institute’s Chris Wodicka said that the lawmakers of the state should be able to think about what they are doing with the funding in a careful manner. They should focus on restoring schools that have been run down because of the recession and tax cuts should be given as a relief to those who are not included in the federal tax law.
Wodicka said that the state was already earning enough from businesses and estates with VA tax ID but because of the additional funding, it should be able to assist families that were not able to get a break due to the new federal tax cuts guidelines.